A Pullback Was Due – Cramer's Mad Money (2/2/18)

The Dow went down 665 points on Friday and it was the worst week for stocks in two years. This is a reminder that what goes up has to go down. “We are in the midst of one of the greatest economic expansions that I’ve seen in decades. We are in the most pro-business, pro-profit-creation moment that I have ever seen. We have a president, love him or hate him, who’s been relentless in his embrace of the stock market. Aided by tax reform, our companies are more flush than any time I can ever recall,” said Cramer.

However, both the stock buyback and capital return program by companies will help stocks go up. The jobs report on Friday also showed robust hiring. He added that investors need to be more cautious now. “We need to burn off some of the euphoria before we go all in. In fact, I’d go so far as to say you’re getting a terrific chance to slowly put some money to work at lower prices than you even dreamed of,” added Cramer.

Investors also need to sell weak stocks that have gone up and are now going down to raise cash to buy high quality stocks at a slow pace.

Sell the oils and buy into secular growth theme stocks. Amazon (NASDAQ:AMZN) is the best pick of all. “Everything else? There will be plenty of time to buy others, including some retailers, some industrials and some special situations, companies that are helping themselves that got thrown out with the bathwater,” said Cramer.

“It’s not the end of the world but it is surely the end of the fairy tale world.”

Big tech

Cramer interviewed his CNBC colleagues Bob Pisani and Scott Wapner to get their take on the market action on Friday. Pisani said that he heard traders on the NYSE floor saying it was “about time” and they were happy that volatility and strong volumes returned. Trading volume was up 12% in the last week. Wapner echoed the same sentiments and said that the market had become complacent.

Cramer gave his take on the big tech names. He feels Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG) have not found a bottom yet and there is more downside. Amazon, on the other hand, would have gone higher on Friday had it not been for the decline.

Interest rates

Wapner believes that many investors will take a “wait and see” approach when the market opens Monday. Investors and hedge funds were caught off guard by the sudden volatility and rise in interest rates.

Many are concerned about the spike in interest rates but as far as Yellen is concerned, the economy is where she wanted it to be.

Cramer asked his colleagues Jon and Pete Najarian about the Fed’s order to change board members and curb the bank’s growth.

Cramer said the timing of the move is bad as many investors thought that the bank’s fraud issues were finally behind them. Pete said this action will not take anything away from the bank but will curb future growth. It will have a huge impact on the bank stocks and smart money managers will buy other bank stocks.

Pete said JPMorgan (NYSE:JPM) is worth buying and it will take investors some time to figure out if they want to stay long on Wells Fargo.

Viewer calls taken by Cramer

DowDuPont (NYSE:DWDP): Cramer’s trust owns the stock. The company had a great quarter and their break up is on schedule. Buy the stock on weakness.

Scotts Miracle-Gro (NYSE:SMG): If this stock is owned just for pot, investors are in trouble. It can go down to the mid-80s before it bottoms but investors were buying it for wrong reasons.

Anheuser Busch (NYSE:BUD): The stock has come down and they have a lot of cash. The current quarter is not going to be good. Wait for it to go down and then buy.